DBO Seeks Comments On Commercial Loan Disclosure Rules

This September, Governor Jerry Brown signed SB 1235 (Stats. 2018, Ch. 1011) into law. In a nutshell, SB 1235 adds a new division to the Financial Code imposing specific loan disclosure requirements on providers of commercial financings. These disclosures include:

The total amount of funds provided;

The total dollar cost of financing;

The term or estimated term;

The method, frequency, and amount of payments;

A description of prepayment policies; and,

Until January 1, 2024, the total cost of the financing expressed as an annualized rate.

The bill requires the Commissioner of Business Oversight to adopt regulations governing these disclosures. Cal. Fin. Code § 22804. As a first step, the Commissioner earlier this week issued an invitation for comments on these as yet to be proposed regulations. Mercifully, commercial financing providers are not required to comply with the new disclosure requirements until the Commissioner's regulations are adopted and become effective. Cal. Fin. Code § 22804(c).

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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